Buying Your First Home? 6 Tips to Avoid Costly Mistakes

Avoid turning your dreams into a nightmare when buying your first home.

A lot of first time home buyers commit a number of serious and costly mistakes. They often pay more than what the property is actually worth and even buy homes that they simply cannot afford because they do not have the slightest idea of what they are doing. Since buying a house can be one of the biggest purchases you will make in your lifetime, here are some tips that you need to consider if you want to avoid making some bad financial decisions.

Tips for Buying Your First Home

Here are some tips that can help you make the right decisions when buying your first home.

Learn from the pros. You can't afford to make a mistake when buying a house so consider attending a first-time homebuyers' seminar. These seminars can provide you with all the things you need to know when shopping for a home and financing a purchase.

Know your limits. Determine what you can afford by examining your average monthly budget. Do you think you will have enough money to pay for your mortgage, home expenses, insurance and taxes after paying all your bills? If you do, then go ahead and proceed with your plan. If not, then you may need to change your spending habits or settle for a home that is well within your budget. You can use online mortgage calculators to see what your mortgage payment would be.

Explore your options. Choose a mortgage option that best fits your personal circumstances. If you don't plan to stay on your house for long, you may want to consider an adjustable rate mortgage. Otherwise, you should go for the traditional 15- or 30-year fixed loan instead. You should also shop around for a mortgage since different banks may give you different interest rates and/or different terms.

Avail of first-time homebuyer programs. If you are buying your first home, you should avail of the Federal Housing Administration's (FHA) loan program for first-time homebuyers. By doing so, your down payment could be as low as 3.5% of the purchase price.

Find a real estate agent that you can trust. Ask family and friends if they can recommend a credible real estate agent. You will need his expertise when buying your first home.

Enlist the service of a professional home inspector. Avoid unpleasant surprises later on by doing a home inspection. Check with associations such as the American Society of Home Inspectors and the National Association of Home Inspectors to find a licensed home inspector in your area.